system two

Wednesday, 31 March 2010

Great piece from the oddhead blog here. Great - but in my analysis - wrong....

The markets are not in any shape or form random, in as much as they are not completely unpredictable.

It is to be expected that an analsyis of any daily data would show a random distribution. Movements over relatively long time periods have a stronger, self fulfilling, prohetic capacity due to the effects of mass psychology. Many traders can hold a contrarian point of view for an hour. Fewer, one that contradicts the concensus for a day. Very, very few individuals can hold out for a week, month or year.

In other words, with enough time to come to a concensus, the market tends (not all the time, but tends) to revert to an "established view". The majority of people thinking "the market has dropped 2%, it'll probably bounce back to a fib. point @ 33%" - and on avergae - most of the time, it happens. The net effect being a consistency you see in the oddhead data. where you see an even distribution of larger and smaller price movements to reflect the different states of markets over time.
If you did this analysis with the week or month stats - it would be even more perfectly distributed.

It does not mean that the markets are perfectly random in the size of their movements however. Not at all.

To find human characteristics. To uncover an edge, you need to look in a little closer. If you were to compare histograms on the hour data - 8:00am compared to 10:00pm for example - you'd see extraordinary differences. At 11 o'clock the histogram would be narrow and taller than at 10:00pm. Price movements would be, on average larger, and more frequent.

Monday, 22 March 2010

To “delay gratification” – to abstain in the belief of a greater future reward is one of the most important, hard wired capabilities humans posses. It goes to heart of what separates us from the rest of the animal kingdom.

Handed down through eons of patient trial and error - learned self control is at its most basic - a measure of psychological strength. When hunting a nervous quarry or persevering in the delicate act of creating fire – our ancient ancestors were exercising a mastery over their primitive psychology that underpinned our own, modern contentment in life – until now.

Capitalism and the society we have built upon it supposes the opposite.

What we know as the “free market” now glories in indulgence. Like a cancer, our unsustainable economic model is based on exponential growth which can only be achieved if gratification is glorified.

In the 60s the Saudi’s destroyed the long term viability of their oil wells by pumping the crude out too quickly and damaging the delicate structure of the oil bearing strata below – they couldn’t wait. By the 1980s rock stars were taking supersonic flights to save the lives of starving children – it was too important for Phil to play both sides of the Atlantic. Today, nearly 40% of Americans face a lifetime of obesity and a vile early death - drowning in their own flesh.

The practice of marketing is based on this single core tenant – consume now - satiate yourselves immediately and in so doing – demonstrate your superior financial, emotional and intellectual strength. It is apparently perfectly logical, legal and legitimate for us (and our children) to be told thousands of times a day that a billion years of hard wired biology is erroneous. 30 years on Nestle is still trying to convince mothers of the inferiority of their own breast milk - all brands are as bad – Nestle just happens to be targeting a vulnerable group of individuals we vaguely give a shit about.

Our leaders are very honest with us in this respect - we are told on a regular basis that capitalism will only survive if we all do our patriotic duty and consume. Yet this dysfunctional cycle forces us to make appalling choices that contradict all logic and humanity.

It wasn’t always like this of course. At the dawn of industrialisation greater abundance was heralded as a miracle of a modern age – and rightly so. Individualism and greed, those most powerful of forces the industrial age claimed it could tame, raised millions out of abject poverty and for a while, some of the world knew a (relatively) fairer and more just distribution of resources. It took centuries for those eons of conditioning towards abstinence to begin to fail, and for the delicate boundaries of want to be pushed, further and further until the sane lines of moderate consumption were blurred beyond most people’s comprehension

Now, they are all but gone.

We urgently need to transplant the moderate sentiment expressed as “delayed gratification” with a more urgent call for “early abstinence”.

It is counter intuitive to most of us – but contentment and psychological balance are based in moderation. In an abundant world we are blinded into consumption by unnecessary choice. Only with scarcity can our simple human brains accurately discern true value, and know when to excercise self control.

When one rediscovers abstinence, if that isn’t too facetious a phrase in a world where nearly a billion people live without proper food and water, then one discovers a clearer mind, a more peaceful disposition. I would go so far as to say abstinence might almost be addictive – in as much as it taps into a deep seated desire for control, which although ultimately illusory, touches something enriching within the human psyche.

Not exactly a vote winner I conceed, but pretty important for the longevity of our species...

Tuesday, 16 March 2010

Feels weird how little coverage API's and the semantic web get in ad land. These 2 concepts are by far the most exciting tools in online marketing and yet only 400 people have watched the clip below (an old version which has since been removed did have a good couple of thousand admittedly)

If I ran an agency I'd only employ people who had this in their youtube favourites....

Yes he is a borderline pompous prick - but he's bloody good at visualising his message - and more importantly - he's one of the few academics in the world with enough balls to go up against the US theocracy...

Wednesday, 3 March 2010

API’s – or application programming interfaces – are a critical part of the digital world.

Without them, developers would be unable to use other people’s data in their own applications and widgets.

When you use a weather application on your iPhone – its getting its information through an API. When you see your pictures from flickr in a widget on facebook – the widget is pulling those images from your flickr account via its API. When you see a google map with information about the victims of an earthquake plotted on it – you get the idea….

From a planning and marketing perspective this technology is incredibly exciting. A brand with an API is automatically social, accessible, human. The implications of having one ripple through the business and affect all manner of systems and processes for the better. Information is set free. People inside and outside of the organisation suddenly have a reason to talk to each other. Users engage and communicate with the brand in amazing new ways. APIs are the best weapon a planner has in his / her armory to deepen engagement. And best of all, from the brands point of view. They mean everyone else does the heavy lifting of application development.

So it was with some excitement this morning that we got an email from a client to say the work we’ve been doing with them to introduce them to the delights of “pull” marketing has paid off – and they’re now thinking of building one. The client, apart from being one of our most forward thinking, is particularly interesting because the data they hold concerns stuff people really care about. On some level, everyone in the UK is interested in the data that this client holds and because of this – where its seeds will spread – is anyone’s guess.

Treehugger, New York Times, The Guardian, Wired - they all have an app - for which they charge. But having all that different information silo'ed in separate applications makes me have to work harder.

We have RSS. It works perfectly well. Why do I have to reformat my new habits?

The whole app thing smacks of the ringtone "craze" of the mid 00's - of old skool media men building artificial walls around content to try and sustain a dying business model.

A company I was running at the time spent thousands developing online audio editing software so our users could create realtones, in real time. A complete waste of time. By the time we launched everyone had figured out how to link a song in their phone library to an incoming call.

The music industry loved realtones because it represented an opportunity to turn the clock back - to charge for content because of the specific format in which it was being used - it was the virtual equivalent of the CD (if that makes any sense). Newspaper love apps for the same reason.

Tuesday, 2 March 2010

At one point in the conversation he said "I can tell the people who walk into any supermarket to buy whatever I want"

I said that didn't apply to me, and he agreed - but pointed out that there are a lot more stupid people in the world that bright ones.

On a practial level he's correct - 50% of the population have an IQ under 100. Nearly 20% of the population are classified as retarded (with an IQ under 80). The population is also probably getting more stupid, due to a dysgenic effect. See Bell Curve for a brilliant (if controversial) disection of IQ here.

If the acquaintance is right. That IQ affects an individuals susceptibility to marketing - then it all starts to feel a little uncomfortable. Does for instance, the 15% of the internet population who click on banners simply represent all the stupid people online?